SUMMER TRAINING PROJECT REPORT On

Business Process Analysis of Kotak Securities at Lucknow

For

Kotak Securities Ltd.

Towards partial fulfillment of Master of Business Administration (MBA) Affiliated to (Gautam Buddh Technical University, Lucknow)

Guided By: Mr. SANDEEP LAKHMANI

Session 2010-11 Department of Management

Submitted By:ROHIT SINGH

Babu Banarasi Das National Institute of Technology and Management, Sector 1, Dr. Akhilesh Das Nagar, Faizabad Road, Lucknow (UP) INDIA

ACKNOWLEDGEMENT
Learning and acquiring knowledge has no leaps and bounds. It is one resource that never gets exhausted, the more you preach the better it gets and the more it lives down through ages. From the day since man set his foot on earth learning process had begun and is still evolving making life happier and memorable. One can only lead a person to things he needs to know, but never can teach him how to learn. Experience through failures and hardship makes a man perfect.

I express my sincere gratitude towards Mr. Kulbhushan Singh Cluster Head at Kotak securities for giving need and opportunity to undergo summer training in one of the leading financial institution of India.

I also take the opportunity to thank my Course Co-ordinator Mr. Jatin Srivastava to provide me with relevant insights to understand the project and guided at every step. Without his guidance and undivided attention, the project would not have taken this shape.

PREFACE
Any kind of learning is incomplete till it is practically applied in the concerned field. Only then does a person understands and get hold of even the minutest details of what he/she has learnt in their stay at the institute doing his/her MBA. So, to practically apply what I had gained in the past one year in the MBA programme, I underwent summer training at Kotak Securities Ltd., Lucknow. It has been a wonderful learning experience, which has given me an insight into management of modern business which requires an appreciation of multidisciplinary concept and indepth knowledge of specific analytical tools, geared to the solution of real life problems. No doubt every real situation is unique but a set of theoretical tools of knowledge, itself based on empirical foundation can help in developing the mechanism for handling such situation. So, the MBA curriculum has been desired to provide to the future managers ample practical exposure to the business world. The summer training is essential for the fulfillment of MBA curriculum; it provides an opportunity to the student to understand the industry with special emphasis on the development of skills in analyzing interpreting practical problems through application of management.

DECLARATION
I, ROHIT SINGH Student of M.B.A. IInd year, Babu Banarasi Das National

Institute of Technology and Management, Lucknow (Uttar Pradesh) hereby declare that all the information facts and figures produced in this report is based on my own experience and study during my open market research in analyzing the Business process analysis of Kotak Securities

I further declare that all the information and facts furnished in this project report are based on my intensive research findings. They are first hand and original in nature.

ROHIT SINGH Roll no.-0905470089 Student of M.B.A. 2 n d Year, Babu Banarasi Das National Institute of Technology and Management, Lucknow

TABLE OF CONTENT
Introduction History Company Profile The Group Product Profile CDSL and SEBI Depository Participants Market Share Job Description Objective of the Study Research Methodology Difficulties Faced and Major Limitations Findings and Analysis SWOT Analysis Conclusion and Suggestions Annexure Bibliography 1- 3 4- 6 7- 10 11- 15 16- 32 33- 38 39- 47 48- 49 50- 53 54 55- 60 61- 64 65- 75 76- 79 80- 83 84- 89 90- 92

INTRODUCTION
Practical knowledge is an important suffix to theoretical knowledge. One cannot merely depend upon the theoretical knowledge. Classroom lectures make the fundamental concept of management clear. They also facilitate the learning of practical things. However, classroom lectures must be correlated with the practical training situations. It is in the sense that practical training in a company has a significant role to play in the subject of business management. Market research is indeed an ancient art, it has been practiced in one form of the other since the day of Adam & Eve. Its emergence is of relatively recent origin for success of any business & with in this relatively short period it has joined a carry great deal of importance.

Management in India is heading towards a better profession as compared to other professions. The demand for professional manager is increasing day by day. To achieve profession competence manager ought to be fully occupied with theory and practical exposure of management. A comprehensive understanding of the principle will increases their Decision making ability and sharpens their tools for this purpose. As an essential part of our course, I got the privilege to have training in kotak securities Ltd. (A member of NSE and BSE of India) the work has carried over a span of 2 months. My job profile includes making customer relation in Lucknow for the opening of trading & Demat A/c. and to know customer views about our services and about investment in stock market.

It has been rightly said that knowledge is power. It is common knowledge that money has to be invested wisely. If you are a novice at investing, not terms such as stocks, bonds, equity etc. Relax. It takes years to understand the art of investing. You are not alone in the quest to crack the jargon. To start with take your investment decision with as many facts as you can assimilate. But, understand that one can never know everything. Learning to live with the anxiety of the unknown is part of investing. Being enthusiastic about getting started is the first step, through daunting at the first instance. Thats why our investment course begins with a dose of encouragement. With enough time and a little discipline, you are all but guaranteed to make the right moves in the market. Patience and the willingness to pepper once savings across a portfolio of securities tailored to suit once age and risk profile will propel once revenues at the same time cushion you against any major losses.

Investing is not about putting all your money into the various means . Investing isnt gambling or speculation; its about taking reasonable risks to reap steady rewards. Investing is a method of purchasing assets in order in order to gain profit in the form of reasonably predictable income (dividend, interest, or rentals) and appreciation over the long term.

The investing options are many, to name a few Equity Bonds Mutual funds Fixed deposits Other

HISTORY

HISTORY OF THE COMPANY

The Kotak Mahindra group was born in 1985 as Kotak capital management financies ltd. Uday Kotak, Sindey A.A Pinto promoted the company. Industrialists Harish Mahindra and Anand Mahindra Took a stake in 1886 and thats when the company changed its name to KOTAK MAHINDRA FINANCE LIMITED.

1986: Kotak Mahindra Finance Limited starts the activity of bill discounting. 1987: Enters the base and hire purchase market. 1990: Auto finance division was started. 1991: Investing banking was started. 1992: Enters funds syndication sector. 1995: Brokerage and distribution businesses incorporated into a separate company Kotak Securities. 1996: The auto finance business was hived off into a separate company- Kotak Mahindra Primus Limited, for financing ford vehicles. 1998: Enters the mutual fund market with launch of Kotak Mahindra Company 2000: Kotak Mahindra ties up with old mutual for the life4 insurance business. Kotak Securities launches kotaksecurities.com- its online broking site. 2003: Kotak Mahindra finance Limited converts to bank 10

Kotak securities limited is a subsidiary of Kotak Mahindra Bank Limited is one of largest private brokerage and distribution house Set up in 1994 by Mr. Uday Kotak. Kotak securities have 25% equity participation from Goldman Sachs.

Kotak securities have been the largest in IPO distribution and were ranked no.1 in the year 2003-2004 as book running lead managers in I POs by prime database. The core strengths are the expertise in equity research and wide retail distribution network. It has an outstanding research division involved in macro economic studies, industry and company specific equity research with analysts specializing in particular economic sectors and large cap stocks. Kotak securities manage assets over rupees 1200 crores under portfolio management services.

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COMPANY PROFILE

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Main areas of business Kotak Securities are : Institutional broking business Private client group Client money management Retail distribution of financial products Depository services Online trading

Institutional broking business:This service primarily covers secondary market broking. It caters to the needs of foreign and Indian institutional investors in Indian equities Kotak Securities institutional business also incorporates a comprehensive research cell with sect oral analysts who cover all the major areas of Indian economy.

Private client group:Private client group is a special investment division for high net worth individuals. Nonresident Indian investors, trust corporate and banks the investments product range at private client group is among the widest in the country and covers debt and equity, mutual funds and specialized structured investment products.

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Client money management:This division provides professional portfolio management services to high net worth individuals and corporate. Efficient fund management is maintained at all times as well as complete accountability and transparency. Its expertise in research and stock broking gives it the right perspectives from which it provide its clients with investments advisory services that benefit the clients.

Retail distribution of financial products

Kotak Securities has a comprehensive retail distribution network, comprising about 7000 agents, 13 branches and over 20 franchisees across India. This network is used for the distribution and placements of a range of financial products that includes company fixed deposits, mutual funds initial public offerings, equity and small saving schemes.

Depository services:Kotak Securities is a depository participant with national securities depository limited for trading and settlement of dematerialized shares. Since it is also in the broking business investors who use its depository services get dual benefit.

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Online trading:Kotak Securities online broking service kotaksecurities.com offers services for retail investors who like to trade on net its unique product offering securities as margins and its market watch facility with real time prices combined in an order facility not offered by and other web site at present.

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The Group

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THE GROUP
The group is organized on the following:Kotak Mahindra Group Strategic Business Units

Asset Finance

Knowledge & Skill Insurance

Wealth Management

Kotak Mahindra Bank Ltd.

Kotak Securities

Kotak Mahindra Om Kotak Mahindra Capital Company Ltd. Life Insurance

Kotak Mahindra Primus Ltd.

Kotak Mahindra AMC Kotak Mahindra Venture Capital Fund

Kotak Mahindra ( U K ) Ltd. Kotak Mahindra (International) Ltd. Kotak Mahindra Inc

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Kotak Mahindra Bank

In Feb. 2003 Kotak Mahindra Bank finance limited the groups flagship company was given the license to carry on banking business by RBI. This approval creates banking history since Kotak Mahindra Finance limited is the first company in India to convert to a bank. Mr. K.M. Gherda is the chairman and Mr. Uday Kotak is the vise chairman managing director of the bank.

A Kotak Mahindra Primus limited

Kotak Mahindra Primus limited is a joint venture between Kotak Mahindra Bank Limited and Ford credit formed to finance all non ford passenger vehicles. The company was incorporated on 20th February 1996 and commences its operation on 1st November 1996. The net worth on 31 st March was 464 crore. Mr. Kotak is the chairman and Mr. Dipak Gupta, Mr. C. Jairam, Mr. Gaurang Shah, Mr. Pankaj Desai, Mr. Nishchal , Mr. Gregery Coham and Mr. Raghu Nandan are the directors of Kotak Mahindra Primus Limited.

Kotak Mahindra Asset Management Company

Kotak Mahindra Asset Management Company is a wholly owned subsidiary of Kotak Mahindra Bank limited is the asset manager of Kotak Mahindra Mutual Fund. KMAMC started operation in December 1998 has over 1, 35,000 investors in various schemes.

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Kotak Mahindra Venture Capital Fund

KMVCF sponsored by Kotak Mahindra Bank limited was formed to cater the needs of the modern day entrepreneur. The fund partner with companies for their first and second of funding requirements in the emerging high growth sectors such as IT research and proudest, internet and E-commerce, media, healthcare, investments in company could range from Rs. 20 millions to Rs. 100 millions. KMVKF is a SEBI registered VCF with KMBL as the principal investor and 30 other private investors. KMBL is the investment manager of fund.

Kotak Mahindra International Limited

Kotak Mahindra international limited is the international arm of Kotak Mahindra Group and was incorporated in 1994 in Mauritius; with a brand in Dubai and now international operation are cover the United Kingdom through Kotak Mahindra UK limited in USA through Kotak Mahindra Inc. USA. These companies are subsidiaries of Kotak Mahindra Capital Company.

Kotak Mahindra Capital Company Limited

KMCCL was incorporated 1996 as a joint venture between Goldman Sachs the international banking and brokerage firm and Kotak Mahindra Bank limited. KMCCL in its franchisee business focuses in fine care areas capital markets, mergers acquisition, corporate advisory, structured finance and international operational. 19

KMCCL has advised some of the largest telecom and cement deals in India. KMCCL is a leading player in the field of Media and advertisement. KMCCL is also RBI is approved primary deals in the government securities market. Mr. Kotak is the chairman and Ajay Sondhi is Vice president and managing director.

Om Kotak Mahindra Life Insurance

Om Kotak Mahindra life insurance ventures a 74:26 joint venture with Old mutual. U.K. Kotak Mahindra Bank limited believes that life insurance is a logical expansion of its exiting financial services business. Old mutual is a leading financial services provider in the world, providing a wide range of financial services in the area of insurance, asset management and banking.

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PRODUCT PROFILE

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PRODUCT OF THE COMPANY Introduction to online trading:Technology is revolutionizing every field of human endeavor and activity. The rapid growth in number volume and value and securities in the Indian capital market exposed the limitation of handling and dealing in securities. In physical / paper modes, shortcoming of the market became manifest in terms of bad deliveries, delay in transfer and irregular settlements etc. electronic medium of trading introduced first by national stock exchange (NSE) followed by the stock exchange Mumbai (BSE) in 1995 by the help of online trading. Share traders can easily purchase and sell their shares through their own terminals or through brokers terminal without any paper work. In order to provide efficiency, liquidity and transparency NSE introduced a nationwide online fully automated screen based trading system (SBTS) where a member can punch into the computer quantities securities and the prices at which he likes to transact and the transaction executed as soon as it finds a matching sale or by orders from a counter party SBTS electronic matches orders on a strict price/ time priority and hence cuts down on time cost and risk of errors as well as on fraud resulting in improved operational efficiency. It allows fasters incorporation of price

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sensitive information into prevailing prices, thus increasing the informational efficiency of market.

NSE has main computer, which is connected through very small aperture terminal (V-SAT) installed at its office, Brokers have terminal installed at their premises which are connected through V-SAT/ leased lines/ modems.

Investors inform a broker to place an order on his behalf. The broker enters the orders though his PC and sends signal to the satellite vie V-SAT. The signal is directed to mainframe computer at NSE. The order confirmation message is immediately displayed on the PC of the broker. By the help of given diagram we can easily understand how people trade online.

The online division of Kotak securities offers its customers the facility e-broking and through it customers accesses a brokers website through his Internet enabled PC can place orders on the trading engine of the e- broker and the orders are routed the stock exchange and executed there on. Electronics broking services offered on the Internet by Kotak securities through its website www.kotaksecurities.com offers only on the NSE the scripts on which NSE moves are fifty which are as follows:

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ONGC RELIANCE IND. TATA CONSULTANTS INFOSYS TECHNOLOGY WIPRO BHARTI AIRTEL ITC HLL SBI ICICI BANK HDFC BHEL SAIL RANBAXYLABS TISCO HDFC BANK GAIL SATYAM COMPUTERS TATA MOTORS L&T BAJAJ AUTO 24

MARUTI UDYOG RELIANCE ENC

HCL TECHNOLOGY PUNJAB NATIONAL BANK HERO HONDA HINDALCO BPCL SUN PHARMA HPCL GRASIM INDS CIPLA NATIONAL ALU GUJRAT AMBUJA CEMENT TATA POWER MTNL GLAXO SMITH P ACC VSNL M&M

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ORIENTAL BANK ZEE TELEFILM DR. REDDYS ABB

IPCL SHIPING COPORATION TATA CHEMICALS DABUR TATA TEA COLGATE

The pre requisites to start e trading are:

Trading

account to deal in electronic share mutual funds and IPOs on

kotaksecurities.com.

Demat account with Kotak securities for dealing.

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 Internet

bank

account

with

banking

partner

to

move

funds

to

kotaksecurities.com or receive payments from kotaksecurities.com. The banking partners are Kotak Mahindra bank HDFC, CITI bank or UTI bank.

The Accounts offered by Kotak securities are: Kotak privilege circle account
Kotak value account Kotak gateway account

Kotak freeway account Kotak high trader account

Kotak privilege circle account:One can activate a KPC account with any amount more than Rs.10,00,000 as margin by way of cash on stock. In KPC one can avail the following:-

6 times expenses on the margin

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Initial brokerage payment as per the lowest brokerage slab to be recalculated at the end of the month as per the turnover

Access to KEAT premium free of cost. Free call& trade facility. Margin finance at attractive rates of 13% p.a. Lowest delayed payment interest if 13% p.a. Free research advice via SMS.

Kotak value account:One can open KVA account with any amount between Rs. 10, 00,000 and 5, 00,000 as initial margin. One can avail the following:

5 times exposure on the margin initial brokerage payment as per the middle brokerage slab to recalculated at the end of the month as per the turnover.

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Access to KEAT desktop free and discount on KEAT premium charge of Rs. 300 only per month.

Research advice via SMS for a fee of Rs. 75 per month. Call and trade facility with 20 calls free thereafter Rs. 15 per call. Discounted delayed payment interest of 16% p.a.

Kotak gateway account:KGA account can be opened with any amount less than Rs.5,00,000 as initial margin.

One can avail the following:-

4 times exposure on the margin, Access to KEAT desktop free of cost and KEAT premium for Rs 500 only per month.

Research advice via SMS for a fee of Rs. 100 per month. Call and trade facility with 20 calls free thereafter Rs. 20 per call Delayed payment interest at 18% p.a.

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Kotak freeway account:Free account can be opened with any amount less than Rs. 1, 25,000 as initial margin.

One can avail the following: Zero brokerage plans on square off trades, only levy, service tax and other charges at 0.03% per transaction. Flat fee of Rs. 999 per month. 4 times exposure on the margin. Maximum exposure Rs.5,00,000 Delivery brokerage ranging from 0.59% to 0.18% depending on volumes Delayed payment interest at 18% p.a.

Kotak high trader account:High trader account can be opened with any amount of margin. In the Kotak freeway account one can avail the following: 6 times exposure on the margin. And auto square off product where all the cash order would be squared off after 3.10 PM. 30

Can trader in the derivative segment on the high trader with the normal limit i.e. multiple of four on stock derivatives.

Delayed payment interest at 18% p.a.

THE BROKERAGE STRUCTURE:DELIVERY SLABS Volume Slab <1 lakh 1 lakh-5 lakh 5 lakh-10 lakhs 10 lakhs-20 lakhs Brokerage 0.59% 0.55% 0.45% 0.36%

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20 lakhs-60 lakhs 60 lakhs-2 crores > 2 crores

0.27% 0.23% 0.18%

Kotak Securities has tie up with Citi bank, AXIS bank, KOTAK Mahindra bank, ICICI Bank and HDFC bank for online fund transfer. Any money owed to client credited directly into Internet bank account of customer by Kotak securities on the next day.

Documents required are: Two photographs signed across.

Identity proof photocopy of passport, PAN/voters ID card, driving license.

Address proof photocopy of electricity bill, telephone bill, bank passbook.

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 Cheque for margin amount+ application fee in the name of kotaksecurities.com +

a cancel cheque. .

Signature proof passport, PAN card Bank passbook.

Mutual funds:One has the same convenience while investing in mutual funds; one can easily purchase or invest in mutual funds without the hassles of filling application forms. The bank account will be credited directly by the fund house after T+3 days. To suit the changing needs you can switch your money online from one scheme to another in the same fund family. Mutual funds on site are:-

Kotak Mahindra Mutual fund

Prudential ICICI Mutual fund HDFC mutual fund Standard Chartered Mutual fund Sundaram Mutual fund Tata Mutual fund

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Franklin Templeton Mutual fund

Cash Squaring Up
Volume slab < 25 lakhs 25 lakhs- 2 crores 2 crores-5crores > 5 crores Brokerage 0.06% both sides 0.05% both sides 0.04% both sides 0.03% both sides

Buy now sell tomorrow with a guarantee (BNST-G):BNST-G is special service offered by kotaksecurities.com in which one can sell 75% of the specified shares that one has purchased before you receive the delivery of the shares from the exchange, without the worry of short allotment.

New from Kotak Securities.com:34

 Securities accepted in lieu of cash margin green channel. Multiple available on sales marked for delivery. Short sales are possible. Stop loss order After market order Cash and derivatives rates on single screen

Account opening process:Account opening involves opening of trading account with kotaksecurities.com, demat account with Kotak securities, bank account with a banking partner. Demat account can be with Kotak securities or Kotak bank or even with Citi bank. Account opening fee as per the margin paid up front. Kotak Securities has Internet banking tie-up

Initial public offerings:At kotaksecurities.com one can apply for IPOs without going through the tedious process of application filling, cheque signing and submission. One need to do is fill the requisite details in the online screens of IPO application. Kotaksecurities.com will dot the paper work for you on the basis of information provided by you. This is done 35

on the authority of the power of attorney executed by you in favor of kotaksecurities.com

DEMAT FORM V/S PHYSICAL FORM:A Comparison of investment in securities:-

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In physical form
Insurance is required

In demat form
No insurance is required

Laborious inventory verification during internal stock taking and audits.

The DPs makes periodic statement of holding available. Easy verification of audits.

No custody charges if using own premises however, custodians charges20 to 40 basis points.

Custody charges vary from 3 to 10 basis points depending upon DP selected.

Risk of theft

No risk of theft

Receipt of corporate benefits need monitoring and risk of loss in transit not ruled out

Faster and hassle free receipt of corporate benefits.

BUYING:In physical form

High brokerage Stamp duty at 50 basis points

In demat form
Low brokerage No stamp duty

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Posted and handling charges for lodgments and transfers Cost involved in follow up/rectification No transaction charges

No posted and handling charges

Guaranteed good delivery

Transaction charges vary from 7 to 10basis points.

SELLING:In physical form

High brokerage Transaction only in market lots Off market transaction are costly and risky Jumbo lots need to be split into market lots for selling

In demat form
Low brokerage, NSE brokers charges half the brokerage on electronic trades No market lot concept Facility for off market transaction market transactions, specially within the group No need to split

CDSL-CENTRAL DEPOSIATORY SERVICES LIMITED

CDSL is another depository after NSDL its promoters are Bombay Stock Exchange,

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The Calcutta Stock Exchange Association Limited, Bank Of India, HDFC Bank Ltd. Standard charted bank, State Bank Of India, Bank Of Baroda, Union Bank of Indian, bank Of Maharashtra, Centurion Bank etc. As on 30th June 2001, CDSL which are to instead to benefit the ultimate investors, are briefly narrated below: CDSL choose the Centralized Data Base Architecture with online connectivity with the DPs who provide the services to the investors, because of the online Centralization, the cost for setting up Depository Participant services is drastically low. CDSL have urged the DPS to pass on the benefit of lower cost of set up to investors. CDSL on its part have kept its tariff as low as possible. It has virtually nil charges under all the major heads except against transactions. CDSL might add that right from the stage of its conceptions,. Its promoters, in the main the BSE, have taken a public stand that there shall be no custody charge on the ground that (1) Investors who otherwise keep their scripts at Home, do not insure that charge and (2) That they can get more and more investors enthused about Dematerialization and holding there decorates in book entry from.

Software offer to clearing houses of the stock exchange free of cost permits direct entry of transaction in the account beneficial owner (investor), without

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having go route it through a broker account. this facility is a safeguard against possible mis-directions

Of clients securities and it cuts down time taken for Completion of transaction. It is found to be an investor friendly innovate system.

SECURITIES AND EXCHANGE BOARD OF INDIA

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Major part of liberalization process was the repeal of the capital Issues (control) Act, 1947, in May 1992. With this, governments control over issues of capital, pricing of the issues, fixing of premium and rates of interest on debentures etc. ceased, and the office which administered the Act Was abolished: the market was allowed to allocate resources to computing uses. However, to ensure effective regulation of the market, SEBI Act 1992 was enacted to establish SEBI with Statutory powers for:

Protecting the interests in securities Promoting the development of securities market, and Regulation the securities market.

Its regulatory jurisdiction extends over corporate in the issuance of capital and transfer of securities, in addition to all intermediates and person associated with securities market. SEBI can specify the matters to be disclosed and the standards of disclosure required for the protection of investors in respect of issues; can issue directions to all intermediaries and other person associated with the securities market in the interest of investors of orderly development of the securities market: and can conduit Enquirer, audits and inspection of all concerned and adjudicate offences under the Act. In short, it has been given necessary autonomy and authority to regulate and develop an orderly securities market. All the intermediates

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in the market, such as broker and sub broker and sub broker, underwriters, merchant bankers, bankers to the issues, share transfer agents and registrar to the issues, are now required to register with SEBI and are governed by its regulations. A code of conduct for each intermediary has been prescribed in the regulation; capital adequacy and norms have been specified; a system of monitoring and inspecting their operations has been instituted for compliment; and discipline action are being taken against the intermediaries violating are regulation.

Functions of SEBI
SEBI has been obligated to the interest of the investors in securities and to promote and development of, and to regulate the securities market by such measures as it thinks fit.

SEBI, in particular, has powers for:

Regulating the business in stock exchange and other securities market; Registering and regulating the working of stock brokers, sub-brokers ,share transfer agents , bankers to an issues ,trusts of trust deeds registrar to an issues,

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an issue, merchant bankers ,underwriters, portfolio managers, investment adviser and such other intermediates who may be associated with securities markets in any manner;

Registering and regulating the working of the depositors, participants, custodians of securities, foreign institutional investors , credit rating agencies and such other intermediaries as SEBI may, by notification, specify in this behalf;

Registering and regulating the working of venture capital funds and collective investment schemes including mutual funds ;

Promoting and regulating self- regulatory organization; Promoting investors education and training of intermediaries of securities market; Prohibiting insider trading in securities; Regulating substantial acquisition of shares and takeover of companies; Calling for information from, undertaking inspections, conducting inquiries and audits of the stocks exchange, mutual funds and other persons associated with the securities market and intermediates and self regulating organization in the securities market;

Performing such functions and exercising to securities Contrast (regulation)Act, 1956, as may be delegated to it the central government:

Leaving fees or other charges for carrying out the purpose of this sections; Conducting research for the above purpose:

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Calling from or furnishing to any such agencies as may be specified by SEBI such information may considered necessary by it for the efficient discharge of its functions.

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ROLE OF THE DP (DEPOSITORY PARTICIPANTS)

A depository is an organization formed to provide electronic depository facilities for securities traded. Securities are then held in the electronic from through the medium of depository participants (DPs). The National Securities Depository Limited (NSDL) is the first depository in India. The functions of NSDL are regulated by the Securities and Exchange Board of India (SEBI).

The depository is not just another custodian the depository can legally transfer beneficial ownership, which a custodian cannot. The chief objective of a depository is to reduce settlement risk by minimizing the paperwork involved in trading, settling and transferring securities.

To utilize the services offered by a depository, you must open an account with the depository through a DP. The DPs are the link between the shareholder, the company and NSDL.

Depending on the DP, there may or may not be an opening account fee. DPs levy fees towards transaction and custody.

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Banks, financial institutions custodians and stockbrokers can become DPs subject to their meeting certain requirement prescribed by NSDL and SEBI, NSDL publishes the list of DPs registered with them, from time to time.

The DP will provide you with a passbook or Statement of Account periodically to inform you on your holdings.

You can even have a zero balance in your account.

If you lose your Statement of Account, inform the DP and obtain a duplicate.

If holding in the statement are incorrect, approach the DP for clarification.

If you receive an incorrect dividend amount or do not receive it at all, contact the company or register.

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TRADING SYSTEM
THE Exchange, as stated earlier, had an open outcry trading system till March 1995 where member-brokers used to assemble in a trading ring for doing transaction in securities. It had switched over to a fully automated computerized mode of trading known as BOLT (BSE online Trading) System w.e.f. March 14, 1995. Through the BOLT system, the member-broker now enters orders for purchase or sell of securities from Trader Work Stations (TWSs) installed in their offices instead of assembling in the trading ring. This system, which was initially both order and quote driven, is currently only order driven. The system, which is now only order driven, facilities more efficient in-putting processing, automatic matching and faster execution of orders in a transparent manner. The trading in securities at the Exchange is conducted in an anonymous environment and the counter party identify is not revealed the buyer and sellers of securities do not know the names of each other.

The member-brokers of the Exchange were permitted to open trading terminals only within the city limits of Mumbai till1996. The Exchange obtained permission from SEBI for expansion of its BOLT network to locations outside Mumbai. The expansion of BOLT network to cities outside Mumbai was inaugurated by Shri P. Chidambaram, the Finance Minister, Government of India on August 31, 1997. The Exchange was initially allowed by SEBI to set up[ trading terminals in all places 47

except in the jurisdictional areas of other Regional Stock Exchanges, for setting-up trading terminal in the jurisdictional areas of other Regional Stock Exchanges, the Exchanges was required to enter into Memorandum of Understanding (MOU) with the respective Stock Exchange. However, with certain modification in this regard announced by SEBI towards the end of the year 1999, the member-broke of the exchange are now free to install their trading terminals at any place in the country including in the jurisdictional areas of other Regional Stock Exchanges. In order to expand the reach of BOLT network to centers outside Mumbai to reach out to investors in these centers and provide them access t the trading facilities in all scripts listed and permitted to be traded in the Exchange and to support the smaller Regional Stock Exchange, the Exchange has admitted subsidiary companies formed by 15 Regional. Stock Exchange as its member-brokers as on June 30, 2003. The member-brokers of these Regional Stock Exchange work as sub-brokers of the member-brokers of the Exchange. Trading on the BOLT System is conducted from Monday to Friday between 9:55 a.m. and 3:30 p.m. the scripts traded on the Exchange have been classified into A, B1,B2, F, G, and Z groups. The Exchange has for the guidance and benefit of investors classified the scripts in the Equity Segment in A, B1,&B2 based on certain qualitative and quantitative

48

parameters which include number of trades, values traded, etc. for the guidance and benefit of investors. The F group represents the fixed income securities wherein 730 securities were listed as on June 30, 2003 The Exchange has commenced trading in Govt. Securities for retail investors under G group w.e.f. January 16, 2003 and 85 Govt. Securities are traded on the Exchange under this group as on June 30, 2003. The Z group was introduced by the Exchange in July 1999 and includes the companies which have failed to comply with the listing requirement of the Exchange and have failed to resolve investor complaints or have not made the required arrangement with both the Depository Ltd. (NSDL) for dematerialization of their securities. Companies in Z group numbered 2776 as on June 30, 2003.of these, 1275 companies were in Z group for not complying with the provisions of the Listing Agreement and not resolving pending investor complaints and the balance 1501 companies were on account of not making arrangement for dematerialization of their securities with both the Deposotories.1501 companies have been put by the Exchange in Z group as a temporary measure till they make arrangement for dematerialization of their securities. Once they finalize the arrangement for dematerialization of their securities, trading and settlement in their scripts would be shifted to their respective rest groups.

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MEANING OF DEPOSITORY SYSTEM

Depository system is concerned with conversion of securities from physical to electronic form, settlement of trades in electronic segment, transfer of ownership and custody of securities.

In the depository system, the ownership and transfer of securities place by means of electronics books entries. This Rids the Capital market of the dangers and risks related to handling of paper. Its transaction costs are also less as compared to that of physical transactions.

While investors will continuous to exercise the option of holding securities in the physical form, those preferring Rematerialization of scripts are permitted to withdraw from the depository by requesting the issue of physical certificate again. Share transaction costs in the depository shall be lower than the cost of buying and selling physical shares.

Depository system is not mandatory as of now; it is optional and is left on the investor to decide whether he wants the securities to be dematerialized.

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Holding and handling of securities in electronic form eliminates problems that are normally associated with physical certificates and it facilitates faster settlement cycles.

How a depository similar to bank

Bank
Holds funds in an account Transfers funds between accounts on the instruction of the account holder Facilities transfer without having to handle money

Depository
Hold securities in an account Transfer securities between accounts on the instruction of the account holder Facilities transfer of ownership without having to handle securities

Facilities safe keeping of money

Facilities safe keeping of shares

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Mutual funds
Mutual Funds are an attractive means of saving taxes and diversifying your investment portfolio. So if you are looking to invest in mutual funds, Kotak Securities offers you a host of mutual fund choices under one roof; backed by in-depth information and research to help you invest smartly.

Kotak securities have made investing in Mutual funds so simple. All you have to do is one phone call and thats all. No paperwork no queues. Simply pick the phone or log on to the website and place your order.

To start investing in NFOs, all you need to do is open an online trading account. Choose from our wide range of accounts to suit your investment needs. You can call us and we will have our representative meet you or mail us at

easymf@kotaksecurities.com

Kotak Mahindra Mutual fund Prudential ICICI Mutual fund HDFC mutual fund Standard Chartered Mutual fund

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Sundaram Mutual fund Tata Mutual fund Franklin Templeton Mutual fund Cholamandalam Mutual fund

Initial public offerings

At kotaksecurities.com one can apply for IPOs without going through the tedious process of application filling, cheque signing and submission. One need to do is fill in the requisite details in the on line screens of IPO application. Kotaksecurities.com will do the paper work for you on the basis of information provide by you. This is done on the authority of the power of attorney executed by you in favor of kotaksecurities.com.

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MARKET SHARE

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MARKET SHARE
Kotak Securities is one of the worlds leading brokerage firms with a market share of 9%. Kotak Securities limited has been the largest in IPO distribution.

It was ranked no. 1 in year 2003 2004 as book running lead managers in public equity offerings. It has also won the best equity house award from finance Asia in the year 2004.

Again in the year 2005 Kotak has also won the Asias biggest brokerage firm award.

9% share of the total market has been captured by Kotak, 8.5% by ICICI Direct.com, 8% by IF & FS, 2% by India Bulls and rest 72.5% by other local brokers like Motilal Oswal, Alankrit, Anand Rathi, UTI Securities, Sharekhan, Johari, 5 paise.com.

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Job Description

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DETAILED JOB PROFILE

The job undertaken was regarding a detailed analysis of marketing of promotion of Kotak Securities online trading products, studying its current scenario and studying the challenges faced by Kotak Securities online division.

The study helps to know about the market position of Kotak securities as compared to other market players, through the opinion of customers and promoting the products of Kotak securities.

Through directly and data available, we used to do telemarketing for the investors and the non investors and try to convince them about the kotaksecurities.com and how it is better from others, then personally meeting them and providing them with the company brochures and giving them detailed knowledge about how with a minimum amount of money he can start with on line trading .Telling him about the various accounts, which he can open with Kotak and telling him the process how new join his e-trading account, demat account with his saving account.

At the same time, handling back office work, which included solving the clients queries, placing orders, giving daily recommendation to the existing clients. Also giving the demonstration of the software K.E.A.T. (Kotak E trading Access

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Terminal) through which the clients can buy and sell his shares and can do all the trading online only.

AREA ASSIGNED AND TARGET ASSIGNED Area assigned

Area assigned to me was Lucknow city only. Where I surveyed the investors of Aminabad, Hazrat ganj, Gomti Nagar and Chinhat.

Target assigned
As my work was mainly generating leads and converting them into the clients, and I was also handling back office work but there was no target.

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DAY TO DAY JOB EXPERIENCE

As kotak securities is one of the leading financial institution in India, so for the first 10 days was the training period to about the profile the company, the knowledge of kotak securities, the product of Kotak securities, account opening process in Kotak Securities, complete knowledge of market watch, also about the ups and downs of the market how NIFTY and SENSEX moves, what are the main scripts on which they moves and complete knowledge of the software K.E.A.T.

After the training of the ten days, I was very familiar to all the products, the account opening process and about the software and Kotak securities products and various accounts that can be opened in Kotak Securities.

I used to do telemarketing to generate leads and converting them into the clients of Kotak Securities. At the same time I was handling the back office work which included giving daily recommendations to the existing clients, solving the clients queries, fillings account opening forms. During my training period I was the one to generate maximum leads. During the last seven to ten days I have done a survey of the investors of Lucknow city and found that still people are not aware of Kotak Securities and those who are aware are mainly above the age of 50 as they have a deep knowledge of share markets.

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OBJECTIVE OF THE STUDYThe objectives of the study are -

I. To know the Market Share & products of Kotak Securities Ltd. II. To understand the various terms & procedure involved in functioning of share market. III. And To know which type of transaction is likely to be preferred by investors or clients online or offline.

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RESEARCH METHODOLOGY

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Research Methodology:
The research conducted by Exploratory Research this type of research is Qualitative and Quantitative. Qualitative refers to the characters of the data or process by which the data are gathered. The research process consists of a series of closely related activities. Why a

research study has been undertaken. Why a research study has been undertaken, how the research problem has been defined, in what way and why the hypothesis has been formulated, what data has been collected and what particular method

has been adopted and a host of similar other question are usually answered when we talk of research methodology concerning a research problem or study.

Sampling:
A questionnaire was prepared and interviewed with different people. A decision has to be taken concerning a sample unit before selecting the number of samples. It may be geographical as well as individual.

Size of Sample:
The sample size I have chosen was of 90 respondents.

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RESEARCH DESIGN MEANING OF RESEARCH DESIGN

The formidable problem that follows the task of defining the research problem is the preparation of the design of the research project, popularly known as the research design. Decisions regarding what, where, when, how much by what means concerning an inquiry or a research study constitute a research design. A research design is the arrangement of conditions for collection and analysis of data in manner that aims to combine relevance to the research purpose with economy in procedure. In fact, the research design is the conceptual structure within which research is conducted; it constitutes the blueprint for the collection, measurement and analysis of data. As such the design includes on outline of what the researcher will do from writing the hypothesis and its operational implications to the final analysis of data.

TOOLS AND INSTRUMENTS USED FOR THE STUDY

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It is necessary for a researcher to define conceptual structure which research would be conducted. The function of research design is to provide for the collection of relevant evidence with minimal expenditure of efforts, time and money. In this research the research design was as follows:-

1) Time available for the research is every Saturday of the week. 2) The means of obtaining the information is through : Primary data like questionnaire Secondary data like magazines, brochures and Pump lets etc.

3) There is no cost factor related to researcher.

PROCEDURE OF DATA COLLECTION

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Data compilation is an intermediate stage between data collection and analysis. Data compilation involves classification and summarization in order to make data amenable to analysis.

In dealing with any problem, once the sample has been selected the data must be collected from the sample population. There are several ways of collecting appropriate data which differ considerably in context of money cost, time and other resources. They can be broadly classified in to two categories.

Two sources to collect data are namely: 1. Primary Source 2. Secondary Source

PRIMARY SOURCE OF COLLECTING DATA

The Primary Data that I collected were the first hand information which I received through personal interviews with the consumers and through questionnaires. This data gave the most vital information for making my analysis more precise.

SECONDARY SOURCE OF DATA COLLECTION

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Secondary Data involved in my research were the information that I collected through the various broachers and pamphlets of the company which were provided to me during the analysis.

RESEARCH DESIGN :
The research design which has been used in the project report is descriptive in nature.

SAMPLE DESIGN:
The sample design which has been use in this project report is simple random sampling.

SAMPLING UNIT :
A decision has to be taken concerning a sample unit before selecting the number of samples. It may be geographical as well as individual. Here Lucknow market has been taken as a geographical unit and people as an individual unit.

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DIFFICULTIES FACED & MAJOR LIMITATIONS

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DIFFICULTIES FACED

High Brokerage:
other online players.

- Kotak Securities has high brokerage as compare to

Call and trade: - Call and trade facility is payable which is not convenient
for all the clients.

Saving Accounts: - saving account with Kotak Mahindra Bank, AXIS

Bank, HDFC Bank, ICICI bank, CITI bank is mandatory.

Documentation: - in Kotak Securities the documentation process is very

lengthy and cumbersome.

Lack of Awareness: - in Lucknow city, though Kotak is well known but still
there is lack of awareness regarding Kotak Securities and its online division i.e. kotaksecurities.com and its products.

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MAJOR LIMITATIONS
Uncertainty of market
Securities investments are subject to market risk and there is no assurance of guarantee that the objective of the scheme will be achieved. As with any in securities, the NAV of the units issued under the scheme can go up or down depending on the factors and forces affecting the capital market.

Tough Competition

Due to the large number of local brokers investors are confused that where to invest and where not to invest. Local brokers are ready to give the same investment plan in very least brokerage.

Rigid and traditional structure

The people believe investing in bank FDs and post office saving and are reluctant to invest in mutual fund. People like to secure money in terms of leading to the people on high interest, the meant there is safe.

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Socio-economic factors
The most of the people of the country are agriculture dependent. So they invest less in the capital in the market.

Political factors

Due to volatile government and their policies regarding investors and investment, stoke market is not integrated which in turn affect the capital market.

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Finding and Analysis

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72

Ag ressiveInvestors g
10%

40% IPO Equity Cash

50%

In the above diagram we can see that aggressive investors invest more in equity as compare to cash and debt. As these types of investors are risk takers and ready to invest whatever be the market. Aggressive investors comprises of 50% of in equity like equity fund diversified, IPOs 10% in cash like government securities, liquid funds, long term deposits and 40% in debt, like company fixed deposits, bonds, pensions schemes, saving schemes, government securities funds.

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ModerateInvestors
10%

Debt 30% Equity Cash 60%

Moderate investors are those investors who get ready to invest when they get assured that they will get good returns on their investment. They give a lot of thought before investing.

They types of investors invest more in debt like company fixed deposits, pensions schemes, Government saving schemes. In he above diagram moderate investors comprises of 60% in debt, 10% in cash and 30% in equity.

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ConservativeInvestors
10%

20% Debt Equity Cash

70%

As we can see from the above diagram that conservative investors invest very much debt as they run behind the trend, they are a kind of choosy investors. In equity they invest only in some specified scripts, which are less risky for example Infosys, Reliance.

In the above diagram conservative investors comprises of 70% in debt, 20%in equity and 10% in cash.

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V Conservativ Investors ery e

15%

10% Debt Equity Cash

75%

Very conservative investors are least bothered about the market and invest their maximum amount in debt, cash and lastly in equity market with more up the downs.

In the above the diagram very conservative investors comprises of 75% in debt like company fixed deposit, bonds government securities funds, government saving schemes and pensions schemes. 15% in cash as they get high returns on their cash deposits and 10% in equity.

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Expectationof investorsreg arding their investm to g ent row

25%

Average Rate Fast Rate S tesdy Rate 13% 62%

In the above diagram 62% of the surveyed investors expected their investments to grow at an average rate, 25% expected to grow at fast rate that is more returns on their investments and 13% of the surveyed investors expected their investments to grow steadily.

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P erceptionof investors towardsreturn

15%

Returns above inflation rate 21% High returns Safe Return 64%

From the above diagram it was found that 64% of the surveyed investors were more concerned about earning returns above inflation rate, 21% were more concern about earning high returns and 15% had a primary motive of the safety of principal.

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Investorsknowledg about various e Investm schem ent es

8%

23% Average Knowledge Good Knowledge Nil knowledge 69%

In the above diagram we can see that out of total surveyed investors 69% were found with average investment knowledge, 23% were found with good investment knowledge and 8% of people were found with nil investment of knowledge.

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Age group was also a rational issue to know while doing the survey. It was found that 17% of the total surveyed investors were between 20-30 years 32% were between 30-50 years and 51% of the total surveyed investors were above 50 years.

It was found that investors above the age of 50 years are having great potential and good knowledge regarding investment.

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Viewsof theInvestorsif the stock Mark crasheddown et

19%

Wait and Watch 52% 29% More Investment Withdrawal of Investment

Out of the total surveyed investors we can see from the above diagram that 52% of investors wait and watch when the market crashed down they have a lot of patience. 29% will invest more as they are risk takers and hope that in future market will grow and 19% investors will withdraw their money.

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SWOT ANALYSIS

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SWOT ANALYSIS STRENGTHS

Brand Name
The biggest strength is the tag of Kotak being one of the largest groups in finance sector

Compatible Brokerage
Brokerage under various products of Kotak securities is much more compatible than others.

Diversified Product
The company has diversified product to suit the requirements of various clients

Research Advice
Kotak provides with research input and valuable recommendation.

Portfolio Advice

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Provides with free portfolio advice and constantly monitor the value of the clients portfolio with input from the expert advisors

WEAKNESS
Prone to Market Risk
Equity Market depends on overall macroeconomic condition and market scenario.

Returns to broker
There is a very tough competition because of large number of local brokers for e.g. they provide same return on least brokerage.

OPPORTUNITIES
Indian Capital Market is growing
So more and more new investors are interested in investments

Tailor Made Products

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We have tailor made products like customers specified schemes for example Kotak Assist.

Branch Expansion
Large number of branches are opening day by day and ever we are trying to tap uncapped market in the country be 60% of total market.

THREATS
Tough competition
There is a tough competition in finance sector, as almost all the companies are providing with same kind of business.

Unawareness
As major part of GDP is coming from several markets so there people are unaware of this market.

Changing scenario
Our market scenario is changing day-by-day i.e. our market is fluctuating, so this makes investors hard to invest. 85

CONCLUSION AND SUGGESTIONS

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Conclusion and Suggestions Suggestions

1. According to the analysis the investor above the age of 50 years must be taken into consideration as they are having great potential regarding investment.

2. Time taken in account opening too long they should reduce it.

3. Kotak Securities must use marketing tools like point of purchase, advertisement through mass media, like newspapers, magazines, televisions, fairs, and advertisements on Internet.

4. Documents required for an account opening are too unique and confusing. Voters ID or driving license should be taken both as identity proof as well as address proof.

5. The organization is lacking on the parameters of motivation. For example incentives on targets should be given time to time.

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6. No. of signatures, which are made by the lines are too many, therefore should be reduced.

7. Kotak must lay some sound strategies to trap more customers by providing them with less brokerage in comparison to others.

Conclusion
From the analysis of the responses receive from the investors in Lucknow city, a majority of investors are found to be conscious and enlightened regarding their investment, returns and growth.

We have very good market in Lucknow which comprises potential investors but due to lack of basic promotion and publicity these investors are not fully aware of our company and who so ever is aware of the company their investment decisions are done on the basis of security, analysis of risk yield and return few parameters like demographic, physiological, income etc.

E-trading account is a unique combination of saving account; demat and online share trading account as no other depository provides all the three facilities together.

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So my findings are that Kotak securities should make little more efforts to trap the potential investors, like media advertisements, paper advertisement, seminars and business meets and building a good relationship with potential business, more over friendly guidance.

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ANNEXURE

90

QUESTIONNAIRE

91

QUESTIONNAIRE
NAME AGE : :

PROFESSION : GENDER CONTACT NO.: :

1. In which DP you have account?

a. b. c. d.

ICICI Bank Kotak Securities HDFC India bulls

2. Are you aware of kotaksecurities.com?

a.

Yes

b.

No

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3.

Are you satisfied with the time taken by Kotak Securities in account process?

opening

a. b.

Yes No

4. Which trading pattern do you generally prefer?

a. b. c.

Intraday Delivery base Future & options

5. How frequently do you trade?

a. b. c. d.

Daily Weekly Monthly Fortnight

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6. Which recommendations do you follow?

a. b. c.

market news Newspaper Brokers tips

7. What is your trading volume per month?

a. b. c.

Less than 10,00,000 10,00,000<25,00,000 25,00,000>1,00,00,000

8. Does your service provider fulfill your needs?

a. b. c.

Satisfactory Very satisfactory Not

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9.

Brokerage taken by Kotak is reasonable

a.

Yes

b.

No

10.

What you will do if stock market crashes down?

a. b. c.

Wait and watch State of withdrawal State of investment

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BIBLIOGRAPHY
`

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BIBLIOGRAPHY

Books
Marketing Management by V. S. Ramaswamy Research Methodology by C. R. Kothari.

Magazines
Business world Business today Brand Equity CFA Analyst

Newspaper
Economic times Times of India

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Business standard

Websites
www.kotak.com www.kotaksecurities.com www.google.com www.nseindia.com www.bseindia.com www.tradeonline.com

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